HAH 1H2018 Result Update

1H2018 results were not positive. Net sales increased by 71% yoy but gross profit only by 13% yoy because of lower gross margin. Fierce competiton and surging fuel costs decreased the gross margin from 29% to 19%. Besides, financials gains were lower by 81% and operating costs up by 52%, resulting the in net margin going down to 16% compared to 24% in 1H2017. PAT increased 10%, reaching VND 78bn. After deducting minority interest, PATMI even decreased 2%. These 1H2018 results indicate that the company has completed 44% and 59% of its guidance for revenue and PAT, respectively, for the current year.

Improving margins – a crucial task for Bach Hoa Xanh (MWG)

Bach Hoa Xanh – the grocery chain - is growing steadily. Changes in its store-opening strategy has improved the average revenue per store from VND 600 mn in February to over VND 1 bn in July. Additionally, cost optimization and product restructuring have increased the gross margin significantly from 12% in 2017 to 14% in 1Q and 16% in 2Q 2018. However, there is still a long way to go for Bach Hoa Xanh in order to firstly reach the break- even and furthermore contribute to the revenue/profit of MWG.

GEMADEPT JSC’s Initial Report Release (HSX: GMD)

With the 1^st phase of the Nam Dinh Vu port’s operation, GMD is now the second-biggest port operator in Haiphong with around 1.3 mn TEU per annum in handling capacity. As a near-ocean port, Nam Dinh Vu can improve GMD’s competitive position thanks to saving costs and time for shipping lines. We believe this project will also be a long-term growth driver for GMD with total capacity reaching 1.6 mn TEU p.a when the final phase is completed. Meanwhile, Gemalink will not be included in this valuation exercise due to the fact that we aren’t able to determine the restarting time of this project.

The Impact of Decree 116 on Car Imports in The First Eight Months of 2018

Decree 116 supported local manufacturers, partly resulting in a reduction in car imports.

KSB - Business update

KSB specializes in the mining and processing of building stone. The firm has three quarries:  Tan Dong Hiep, Phuoc Vinh and Tan My. Recently, KSB has been approved to extend the exploitation period at Tan Dong Hiep for one more years and invested in new quarry projects. In addition, the company also operates in the industrial park sector, with a total of 500ha land area in Binh Duong province. According to management, KSB estimates total net profit for 2018 of VND 320 billion (+15% YoY), due to an improvement in results in 2H 2018 as Tan Dong Hiep is back in operation. 

PVD – Reversal from receivables can support profits in the short term

In 2017, besides the shortage of contracts and low rig day rates, PVD's business results were affected by the provision of PVEP's receivables.

Growth Opportunity for Textile & Garment Companies

According to the General Statistical Office (GSO), the export turnover of the textile & garment industry for the first eight months of 2018 is estimated at USD 19,4 bn, an increase of 14,9% compared to the same period last year. Major export markets recorded remarkable growth rate such as the US (+10,4%), Japan (+21,9%), South Korea (+17,7%) and ASEAN (+33,9%). Besides, Vietnamese companies are promoting their exports to new market in China with a growth rate of 43.1% in the first eight months. It is expected that by the end of 2018, the export turnover to China will reach over USD 2 bn.

The Highest Trade Surplus In The History Of Vietnam

In the first eight months of 2018, the trade surplus reached USD 4.7 Billion, never seen in the history of Vietnam. That potentially calls for a strong current account surplus in the third quarter of 2018, which will insure that the country can resist external shocks. Growing trade is also in line with the recovery of domestic industrial production.

LTG - Slow growth but potential in the near term

LTG's two main business sectors, CPC and agri-food are not expected to be potential drivers in the next five years. Regarding its core operation, CPC, the main contributor to LTG's performance, is able to maintain high gross margin but revenues will grow slowly. LTG owns high-quality rice products but needs time to penetrate the market. The restructuring process will need more time and cost to become efficient. Therefore, in the intermediate term, we expect LTG’s growth potential to be limited.

ACB - Not Jack of All Trades

In the first half of 2018, customer loans and deposits grew 11.8% and 10.9% YTD respectively. Individual loans experienced the fasted growth, 13.1% YTD and accounted for 56% of the entire loan book. In addition, including corporate bond and valued paper, credit and deposit growth was 11.8% YTD and 9.4% YTD, implying that during the first half of the year  credit grew faster than deposit.

Tile Market – Competition and Competition

Vietnam’s tile market has seen intense competition for years. Domestic manufacturers are facing two major difficulties:

• Smuggled or tax-loophole tiles from China
• Product differentiation and marketing to customers

YEG – New business needs time to be proven feasible

In 1H 2018, YEG almost doubled its revenue and tripled its NPAT compared to 1H 2017, fulfilling 42% of revenue and 54% of profit according to the 2018 plan. In 1H 2018, traditional media and digital media contributed 47% and 49%, respectively. YEG targets that in three years its revenue structure will be: 25% from traditional media, 25% from YouTube channels and 50% from the non-YouTube segment which is a new division of YEG – it enables to advertise on websites, apps and online games.